In response to (“Officials disagree with changes to city employee pension,” The Daily News, Sept. 11): As chair of the city of Galveston Employees’ Retirement Fund board, I would like to clarify the Civilian Pension Board’s position on its recent decision to raise what’s known in city hall as “the Cap.”

I would also like to address concerns voiced by city administrators made to the Galveston City Council regarding the board’s decision at the Galveston City Council’s special meeting on Sept. 10.

To do so requires addressing several key points. First, board members were acting in the best interest of city employees when we voted to raise the pension cap from $50,000 to $60,000. Second, raising the pension cap was a fiscally prudent decision, carefully considered with the board following recommendations proposed by the independent actuaries.

Third, the board remains willing to work with the city as we both continue to work together to improve the civilian pension.

Some background. The city of Galveston provides its employees with a defined pension plan, a type of retirement account in which retirees draw a “defined” monthly payment as long as they live. This pension is funded by contributions from employees as well as the city.

In 2003, a $50,000 pension cap was instated by the board because the unfunded liability, one measurement of the heath of a pension, was of concern.

For Galveston city employees, regardless of the amount contributed, years of service, salary at retirement, etc., the pension “caps” at $50,000 a year. In comparison, the Texas Teacher Retirement System doesn’t. Further compounding the problem, unlike Social Security, the pension doesn’t increase with inflation — there are no cost-of-living adjustments.

Per the Consumer Price Index, the $50,000 cap set in 2003 would need to be adjusted to $74,524 in 2020 dollars. The board feels by raising the cap to $60,000, they’ve taken the first, but not the last step, in remediating problems with the city’s civilian pension.

While raising the cap increases Galveston’s unfunded liability, Galveston’s fund is still financially solid and well within recognized parameters. The board’s decision used conservative, prudent guidelines to help the city’s retirees when they increased the cap.

To the board, the sticking point was while city administrators were well within their fiduciary duties to express their disapproval of raising the cap, the board felt that they didn’t offer any viable alternatives. This after having three months from our May to August meetings to do so.

In closing, to quote the Academy Award-winning film “Cool Hand Luke,” perhaps “what we have here is a failure to communicate.” The board is more than willing to listen to the city’s suggestions for improving the current pension plan. And I believe that city administrators are willing to listen to the board.

In that end, I’m confident that both the city and the board want an outcome that’s in the best interest for all Galveston’s city employees. Onward through the fog.

Don F. Davison is chair of the city of Galveston Employees’ Retirement Fund Board.


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